Financial independence

Financial independence is a state where an individual or household has accumulated sufficient financial resources to cover its cost-of-living expenses without having to depend on active employment or work to earn money in order to maintain its current lifestyle. These financial resources can be in the form of investment or personal use assets, passive income, income generated from side jobs, inheritance, pension and retirement income sources, and varied other sources. Gaining financial independence should not be confused with not doing any work. Financial independence describes the freedom to make individual choices, including pursuing passions. Researchers posit that childhood experiences with money play a pivotal role in shaping values, attitudes, and financial behavior. Financial independence is a subjective concept and can be interpreted differently by different individuals. Some people practice frugal living, save and invest a large percentage of income to achieve financial independence early in their career, as evidenced by people following the "financial independence retire early (FIRE)" movement, while others are in pursuit of traditional old-age retirement. Financial independence can be a modest lifestyle or one with a higher standard of living. Having a financial plan and budget, can provide a clear view of current incomes and expenses, to help identify and choose appropriate strategies to achieve financial independence.